Reluctance to access pension advice due to lack of understanding not just cost
Employees’ reluctance to take pensions advice before accessing their pension pots is due to a lack of understanding of what advice is, and not just costs, Wealth at Work has claimed.
In the second Finance Bill introduced by the government earlier this year, the pensions advice allowance was introduced permitting pension scheme members to access £500 from their pension pot tax-free up to three times before they reach age 55 to pay for regulated financial advice.
However, Wealth at Work director Jonathan Watt-Lay has said: “Cost isn’t the only issue when it comes to employees taking financial advice. I believe the reluctance comes from individuals not understanding what financial advice is, or what it can do for them.”
The Wealth at Work director highlighted the importance of financial education to enable employees to understand the value of taking financial retirement advice. He noted that the firm’s data shows that employees who have attended a pre-retirement education seminar in the workplace are over 70 per cent more likely to request further information and take advice.
“The difference is that following financial education, employees will realise how complicated pension decisions can be and will gain an understanding of how financial advice can help them.
“Supporting employees with financial education and guidance will help them to understand their needs in more detail to make better decisions pre-retirement. This then drives the process of taking financial advice, ensuring that employees understand their personal financial situation and are able to implement their retirement strategy in a tax efficient way.
“The benefit here is that employees save effectively and can afford to retire, something in both the employee and employers interests,” he concluded.
